leading value-added services (VAS) company in India, is planning to give the mobile advertising industry a much-needed fillip. OnMobile is working on its own mobile advertising network which will let local advertisers target consumers by behaviour and demographic profile. The platform is expected to be launched in six months.

Speaking to agencyfaqs! before OnMobile publicly announced its IPO, Arvind Rao, co-founder and CEO of OnMobile, said, "We are working on a platform which will work on SMS, WAP, voice and Net. In the first phase, it will be through the inputs of our clients and their agencies. In phase two, which we will roll out in six months, we are going to provide a web interface just like Google where any local merchant can put up an ad."

Arvind Rao

In one form of the advertising platform that OnMobile plans to launch, callers will get to hear an ad message instead of the ringtone. "One of the programmes we are rolling out is to give people some incentive like free SMS or ringtones in order to allow that tune to be replaced with an ad, which will match the calling party's profile," said Rao. He added that another level of interactivity could be added to these ads, wherein the caller can press a button to be connected to a call centre or send an SMS for more information.

The platform is still on trial, and Rao said the response rates have been as high as 20-25 per cent. However, he is confident that as volumes grow, they can safely maintain a rate of 5-10 per cent.

Commenting on the lukewarm response of most advertisers to mobile marketing, Rao said that most of them have a budget approach, which could lead them to miss out on the value of the medium. "Today, advertisers have a budget and they get advised by some agency and they say, 'We are going to put in 5 per cent in digital'. I think that's the easy way out. It's myopic." However, he also said that some companies like Hindustan Unilever Ltd are willing to experiment and are in fact waiting for the medium to open up. He estimated that mobile could comprise one-third of the ad industry in five years.

Rao is of the opinion that the tug-of-war between content providers and operators has been blown out of proportion. Saying that in the West, where the revenue share is in favour of content owners, the promotion is left to them, Rao said, "The trick in VAS is actually who has the muscle power to promote. I have seen big brands on mobile not achieving one-tenth the traction that an operator-promoted service has...People forget the cost of building a telecom network, of acquiring subscribers in a very competitive market."

He said that the coming of a 3G telecom network will not solve all problems. "We have actually innovated to a point where, in VAS, we are ahead of many developed countries, even with their 3G networks. So, I think that's a myth." He added that operators have been constantly achieving growth rates of up to 80 per cent in VAS for the past five years on the current network.

The strategy for OnMobile's expansion plans is two-pronged: to roll out new products in the domestic market and to expand internationally.

In fact, in its red herring prospectus filed recently, OnMobile stated that it would work on developing mobile commerce applications like movie ticketing, railway ticketing and utility bill payments. It also intends to roll out solutions for merchants to reach out to the rural market.